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  * Kay Leadfoot
  * April 29, 2025

Only Teslas Exempt from New Auto Tariffs Thanks to 85% Domestic
Content Rule

In a major policy shift, U.S. Commerce Secretary Howard Lutnick
announced that vehicles with 85% or more domestic content will be
fully exempt from new tariffs on automobiles.

That's a steep threshold, and as of today, there's only one automaker
that qualifies for the exemption: Tesla.

Tesla Alone Qualifies for Full Tariff Exemption

Here are the top 10 vehicles according to the most recent data on
automobiles ranked by domestic content percentage:

  Rank   Makes          Model           Total Domestic Content
1        Tesla Model 3 Performance      87.5%
2 (tied) Tesla Model Y Long Range       85.0%
2 (tied) Tesla Model Y                  85.0%
3        Tesla Cybertruck               82.5%
4 (tied) Ford  Mustang GT AT            80.0%
4 (tied) Ford  Mustang GT 5.0L          80.0%
4 (tied) Ford  Mustang GT Coupe Premium 80.0%
4 (tied) Tesla Model S                  80.0%
4 (tied) Tesla Model X                  80.0%
5        Honda Passport AWD             76.5%

According to the 2024 data from the Kogod School of Business at
American University, there are only three vehicles that meet the
exemption threshold under the new tariff policy. Those are one cut of
the Tesla Model 3 and two cuts of the Tesla Model Y with domestic
content above the 85% mark.

Where Automotive Tariffs Stand Today

The base tariff rate for all imports is set at 10%, but the standard
for many automakers and automotive part suppliers will be a stiff 25%
, unless they qualify for a rebate program that will be available for
the next two years only.

Clearing that new 85% threshold is a massive win for any automaker,
simplifying their supply chain, regulatory requirements, and most
importantly, pricing.

Is This Favoritism?

You probably can't tell, but I have an eyebrow raised over here, it's
been stuck that way since these exemptions were announced. While
domestic content rules sound neutral on paper, the real-world effect
of this policy is to carve out an exemption that only Tesla benefits
from today.

Watching Elon Musk hang out in the White House for weeks on end was
initially puzzling. It certainly did nothing good for Tesla's revenue
numbers. It absolutely does make sense when you look at the newly
emerging regulatory order, though.

Even for models that come close to that oddly specific 85% mark, like
the Ford Mustang and the built-in-Alabama Honda Passport, a few
percentage points make all the difference between scrambling to adapt
to a steep tariff and skating by untouched.

Stay tuned, these changes are slated to be packaged in an executive
order to be signed this evening. We may have further updates based on
the specific verbiage in the order.

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